Eton Bridge Partners recently published CFO Pathways, our analysis of research into the appointments of CFOs in 2019 and 2020 in the UK. Lynley Hall, Tax and Treasury partner in our CFO & Finance practice, assesses the implication for people operating in her specialism.
At first glance, the research into routes to Chief Financial Officer positions does not paint a rosy picture for people working in Tax and Treasury roles who have ambitions to rise to the highest level of the finance function in an organisation.
Very few of the CFOs who were appointed in the last two years stepped up from a Tax and Treasury position, however, this should not be a cause for despair.
There are several steps that Tax and Treasury experts can take to give themselves a greater chance of securing a CFO role further down their career path.
Narrower, specialised skill sets can be perceived as a negative
The first point to make is that not everybody who works in Tax and Treasury, or in finance as a whole, has aspirations of reaching CFO level.
Many do, however, and I have extensive experience and an understanding of the frustration felt by Heads of Tax and Treasury who find themselves overlooked for CFO roles in favour of individuals who have followed the group finance path.
One of the reasons that a leadership team often takes such a decision is that the skill set demonstrated by Tax and Treasury professionals is highly specialised. Tax requires a technical and detail-focused approach around legislation and its application, while Treasury operatives tend to focus on working capital and banking relationships.
As a result, people who excel in Tax and Treasury are not exposed to the broader requirements, responsibilities and experience gained by individuals who have spent time in senior roles in a group finance context.
Take every opportunity to broaden your scope, experience and potential
There is nothing stopping a Tax or Treasury professional from gaining a broader skillset and, with it, an understanding of the wider strategic and commercial considerations that drive the course of a business.
Indeed, while it may be difficult to move directly from a Tax and Treasury leadership position to the CFO’s chair, it is perfectly feasible to map out a course that takes you to an opportunity from which you can confidently aspire to move on to the C-suite.
If you are a Head of Treasury with such ambitions, I recommend you say yes to every opportunity that bolsters your remit. This could mean adding an FP&A or corporate strategy and development function to your treasury role. Such a step will also move you in the direction of being able to move seamlessly into group finance roles.
The advice for Heads of Tax is similar. Welcome every opening that offers you the chance to broaden your function, and any project that enables you to work with the wider finance team. This could include transaction-related opportunities around mergers and acquisitions, listings and divestments. You will add to your skillset and become more comfortable speaking to the wider business on commercial topics.
You will present a more compelling case in interviews if, as well as displaying your Tax and Treasury experience, you can present clear, demonstrable examples of projects that showcase your broad commercial ability.
If you have worked on a merger or acquisition, or the integration of an acquired business, you will have experience of collaborating successfully with other areas of your organisation as well as lawyers and banks.
Managing internal relationships to demonstrate your ability to reach the C-suite
Many Heads of Tax and Treasury report directly to their CFO. This can be a key relationship for an ambitious individual. It can help your career and aspirations immensely if you are proactive in discussions, and make it clear that you would welcome exposure to a broader remit rather than purely Tax and Treasury.
Additionally, if you have a sufficiently strong relationship with your CFO, there is no harm in admitting your desire to rise to their level one day – and asking for their advice as to how to achieve that aim. That simple step can add to a welcome perception that you have the potential to offer the business so much more than your Tax and Treasury expertise alone.
It is, however, worth bearing in mind that, as our research revealed, some 80% of CFO hires were external. This figure suggests that many organisations, especially large FTSE 150 companies, should place a stronger emphasis on succession planning.
Such businesses should be giving more bandwidth to the development of individuals who understand the DNA of their present location and may have the commercial acumen and drive to rise to the top levels of the organisation.
Ultimately, my advice to Tax and Treasury specialists with ambitions to become a CFO is to work out your next step carefully, take the opportunities to broaden your skillset whenever they arise – and venture outside your comfort zone if the result is to make you a more compelling CFO candidate in future.
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